Budget 2006
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Archived - Chapter 7:
Moving Ahead

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The Government is committed to restoring fiscal balance in Canada. This paper puts forward a new approach for more effective fiscal relations that will lead to a stronger Canada.

Budget 2006 outlines the immediate actions the Government is proposing to take.

Working to Strengthen the Federation—Budget 2006 Initiatives

Accountability through clarity in roles and responsibilities of orders of government

  • Ensuring value for taxpayers’ dollars through focus on federal responsibilities, spending discipline and tax reductions.
  • Investments in core federal responsibilities:
  • Border security.
  • National Defence.
  • Emergency and pandemic preparedness.
  • Aboriginal people.
  • Measures to protect Canadian families and communities, including significant investments in the RCMP.
  • First 1-point reduction in GST rate.
  • Universal Child Care Benefit.

Fiscal responsibility and transparency in budget planning

  • Federal Accountability Act, including a Parliamentary Budget Officer.
  • Two-year budget planning horizon—introducing measures when affordable.
  • Actions to limit spending growth and better manage expenditures.
  • Planned annual debt reduction of $3 billion and medium-term debt reduction target.
  • Proposal for allocating unplanned federal surpluses.
  • Reforms to the Government’s financial reporting, including quarterly updates, consolidation of foundations and improved and transparent revenue and expenditure reporting.

Predictable long-term fiscal arrangements

  • Patient Wait Times Guarantee funded through the 10-Year Plan to Strengthen Health Care.
  • Certainty for 2006–07 Equalization and Territorial Formula Financing payments.
  • Funding of $3.3 billion to provinces and territories for short-term pressures in post-secondary education, affordable housing and public transit.
  • Significant investments in infrastructure.

Competitiveness and efficiency of the Canadian economic union

  • Significant tax reductions for small business and large corporations to create jobs and grow Canada’s economy.
  • Comprehensive personal income tax relief.
  • Measures for education and training, including apprenticeships, and increased support for students.
  • Investments to promote research and innovation.
  • Commitment to work with provinces and territories toward a common securities regulator.
  • Additional support for immigration settlement and integration programs, plus taking first steps toward the establishment of a Canadian agency for assessment and recognition of credentials.
  • Measures to enhance financial security.

Effective collaborative management of the federation

  • Implementation of commitment for greater provincial and territorial participation at the international level (UNESCO).
  • Additional support for agriculture.
  • Proposal to work to reduce the welfare wall through development of a Working Income Tax Benefit.

The Government is committing to further action in the coming year after consultations with provinces and territories and broad discussions.

The Government intends to bring forward key proposals by fall 2006

  • A new approach for allocating unplanned federal surpluses.
  • Renewed and strengthened Equalization and Territorial Formula Financing programs.
  • A new approach to long-term funding support for post-secondary education and training.
  • A new framework for long-term funding support for infrastructure programs.

The Government wants to foster a rich dialogue on how to move ahead and wants to ensure widespread participation in these discussions. To that end, the Government will seek input from a variety of sources. The Government will encourage Canadians to contribute to this important national debate by establishing a website where all interested stakeholders can make submissions and become better informed of progress on the Government’s actions. The Government will seek the views of academics and experts on the approach outlined in this paper at roundtable discussions that will be held over the summer. A key element in those discussions will be to ensure that governments have access to the revenues consistent with their responsibilities.

The Government will undertake extensive consultations with provinces and territories on the specific issues set out in this paper. It will also be essential to ensure that the perspectives and priorities of cities and communities are understood. The Minister of Finance will play a key role in these discussions. He will meet with his provincial and territorial counterparts as soon as possible to initiate discussions on fiscal arrangements issues, on proposals for the allocation of year-end surpluses, and on ways to strengthen the economic and social union and improve competitiveness, including:

Other consultations with provincial and territorial governments will also play an important role in moving ahead:

Parliament will be an important participant in this national dialogue. The Government will look to parliamentarians to provide guidance on measures to address the concerns about fiscal imbalance in Canada.

All of these consultations will help lay the groundwork for productive discussions among First Ministers in the fall of 2006 to consider the broad range of issues identified in this paper.

Budget 2007 would bring forward funding and legislation required to implement the Government’s proposals.

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